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The fight may just be getting started, but unless McCourt has a Plan B for how he's going to get to Round 2, this one may end very early. That whole being broke thing means he has to have financing to keep running the team, and the bankruptcy court just said no to Plan A. That means he either needs to agree to take MLB's offer (which basically means the fight is over and it's just a matter of drawing up terms of surrender), or he better have something else in mind. Quick.

The fight may just be getting started, but unless McCourt has a Plan B for how he's going to get to Round 2, this one may end very early. That whole being broke thing means he has to have financing to keep running the team, and the bankruptcy court just said no to Plan A. That means he either needs to agree to take MLB's offer (which basically means the fight is over and it's just a matter of drawing up terms of surrender), or he better have something else in mind. Quick.

Basically McCourt is finished. No responsible lender is going to give him better terms than MLB, especially since there is a pretty good chance that they will take a pretty big loss on the whole thing.

If McCourt isn't going to be pushed out as owner, I really have no idea what his path forward happens to be.

But won't the real mess be in sorting out all the companies McCourt has created to strip the Dodgers of assets? If the parking lot is making money does he get to keep that? This is some arcane crap from my perspective as a doofus. Hicks still owns the parking lot at the Ballpark in Arlington, so it would make sense that McCourt might tack in that direction, no?

Yes, Shooty, that's his plan. Through that octopus of an org chart, Frank is claiming the business of the "Dodgers" is simply the on-field team. So if MLB manages to wrest that away, he believes he'll still control the parking lot, ticket sales and God knows what else.

Hicks still owns the parking lot at the Ballpark in Arlington, so it would make sense that McCourt might tack in that direction, no?

IANAL but if bud selig is being his usual cunning self i imagine he's got some weapon to bring out to get mccourt to settle. there's already been a rumor floated around town that AEG or whoever wants to build a baseball stadium downtown. its probably a bunch of hot air, but i'm sure selig would not hesitate to put something like this in motion if only to get mccourt to see that they don't want him around, that they are willing to desert chavez ravine. thus forcing mccourt to accept an offer for the potentially useless parking lot and his other entities when he's stripped of the club.

i've also seen it mentioned elsewhere that a bankruptcy judge can roll all the assets up together and force a settlement, don't remember exactly how that worked.

If McCourt isn't going to be pushed out as owner, I really have no idea what his path forward happens to be.

If he's got a brain in his head and a decent lawyer talking to him, his path forward surely has to be to try and negotiate the best possible exit strategy -- i.e., coming out of this with a decent price for the value of the assets he owns less the ridiculous amount of looting they did to the franchise over the years. I have to believe that given the value of the Dodgers and the stadium, McCourt still could walk away with some cash in his pocket if he gives up the pipe dream of trying to hold onto the team and the rest of it as a cash cow to continue to milk.

i think swedish chef has got the gist of it. all the entities claimed bankruptcy together. i guess a judge can say they are inextricably intertwined and hand over the whole thing to MLB, they can get an owner, and mccourt can get compensated.
or, he could negotiate a deal before the whole mess gets decided by the judge?

If he's got a brain in his head and a decent lawyer talking to him, his path forward surely has to be to try and negotiate the best possible exit strategy -- i.e., coming out of this with a decent price for the value of the assets he owns less the ridiculous amount of looting they did to the franchise over the years.

I think he fights tooth and nail. He hasn't shown that much capacity for intelligent decisions in the recent past, so this could drag out.

If media reports are to be believed, the Mets had people lining up for the opportunity to inject $200 million into the Mets' operations. Unless McCourt simply refuses to take on investors, it appears he was too clever by half by carving up the Dodgers' assets like he did.

McCourt files bankrutcy with a financing proprosal from a hedge fund dealer at 10+% interest.

MLB jumps in with a financing offer of 3% but with all kinds of strings attached which would let them boot him out easier.

Court rules that McCourt should take MLB's 3% financing but without the strings. McCourt says thanks very much, and MLB must submit a new finance prorposal without the strings. Also, MLB will not be able to vote on the reorganization plan McCourt is drawing up.

McCourt's camp has already declared victory in today's proceedings. In a statement released just minutes after Gross' decision, an attorney for the Dodgers called the eventual deal between the club and baseball "both economically favorable and consistent with the Dodgers' objective of maximizing the value of the estate in the Chapter 11 process."

While Gross did not approve the deal McCourt proposed, he ordered one that will cost the Dodgers less money without appearing to enable a seizure of the club. The Order specifically forbids the financing from including "default triggers for violations of Baseball's rules and regulations." McCourt and the Dodgers will still be required to follow baseball's policies, but failure to do so will not seemingly allow commissioner Bud Selig to take over club operations.

This is clearly a win for McCourt, he gets cheap financing and saves a boat load of money without any strings attached which would strip him of his ownership rights.

Next up is the court ruling on selling the TV rights which were blocked by MLB. Selling the rights is clearly in the interests of the creditors and Dodgers and will restore financial health and cashflow to the Dodgers. The Judge is clearly putting Dodgers and their creditors interests above MLB's, so I would not rule out the Judge approving a TV rights deal.

Meh. Just move them to LA, where things like parking lots are called highways.

Seriously, this is MLB's chance to fix the insane, Los Angeles-city-enterprise issue that is the stupid parking lots at Chavez Ravine. You've got 60,000 parking spots, on average about 25,000 cars show up, yet you still have to have policemen at the intersection of 110 who direct people on which way to go to get to the ballpark? What is this, 1957? I've been to over 50 games there, and I still get confused, sometimes, because they regularly change directions, and the exit lanes change, etc. And the line of cars backed up screws with peoples lives all the way to long beach. And I still have to walk half a mile to get to the ballpark. And that's just getting TO the ballpark- getting out is a whole other nightmare.

Take them away from McCourt, or whoever has them now, I don't care who it is but they need to stop having anything to do with anything that can affect interstate commerce, and give them to that guy who charges me $5 to walk 2 blocks to the Nokia Center. He rocks.

This is clearly a win for McCourt, he gets cheap financing and saves a boat load of money without any strings attached which would strip him of his ownership rights.

But isn't removing the strings from the financing only one aspect of McCourt's problems? As I understand things, MLB can still try to seize the team simply because McCourt entered bankruptcy, regardless of whether he defaults on any subsequent financing.

Next up is the court ruling on selling the TV rights which were blocked by MLB. Selling the rights is clearly in the interests of the creditors and Dodgers and will restore financial health and cashflow to the Dodgers. The Judge is clearly putting Dodgers and their creditors interests above MLB's, so I would not rule out the Judge approving a TV rights deal.

He won't approve it in a million years. It fairly obviously hurts the long term health of the team, and the judge isn't going to allow that to happen.

I thought Fox already backed off from the TV deal anyway. Contracts were not finalized, and Fox does not want to upset MLB with a local contract, when the national contract is up soon.

Fox backed off when the Dodgers entered bankruptcy, but if the judge were to allow McCourt to open the bidding for future TV rights, it seems likely Fox would jump back in rather than sit back while a competitor secures the rights. (Opinions vary widely re: the likelihood of the judge allowing McCourt to auction the TV rights before Nov. 2012, as stipulated in the Dodgers' current contract with Fox.)

Fox backed off when the Dodgers entered bankruptcy, but if the judge were to allow McCourt to open the bidding for future TV rights, it seems likely Fox would jump back in rather than sit back while a competitor secures the rights. (Opinions vary widely re: the likelihood of the judge allowing McCourt to auction the TV rights before Nov. 2012, as stipulated in the Dodgers' current contract with Fox.)

The only way this benefits the Dodgers in Bankruptcy is if it contains money up front. But will a judge allow such a deal if it impacts the Dodgers in the long run?

The only way this benefits the Dodgers in Bankruptcy is if it contains money up front. But will a judge allow such a deal if it impacts the Dodgers in the long run?

Most of the analysis I've seen has regarded this as being unlikely but not impossible.

I'm not a lawyer and I might be missing something here, but it seems like 'ptodd' was at least partially right in #21. If MLB is forced to loan McCourt the money he needs but without any significant strings attached, then it seems like McCourt's odds of retaining control of the Dodgers at least slightly increased yesterday, despite the headlines calling him the loser.

Even if the judge doesn't allow McCourt to auction the TV rights before Nov. 2012, it's at least plausible that McCourt could use the MLB loan to limp through the next 15 months. He'd still have to fight Jamie McCourt's claim that the Dodgers were community property for divorce purposes (and a possible MLB takeover attempt based on his violations of MLB's rules), but on the plus side, he could be fighting those battles without the constant pressure of meeting payroll every two weeks.

Somebody needs to explain to me what I'm missing, or whether this was just poorly worded.

I get that the Judge can block the loan deal from MLB to the Dodgers. But if MLB doesn't want to loan McCourt the money sans the stings attatched, can the judge actually force them into that agreement? That seems insane. A 3% loan should come with significant strings attatched, why would they want to loan money at that rate otherwise? Especially since without the "strings", it's basically unsecured.

I'm not a lawyer and I might be missing something here, but it seems like 'ptodd' was at least partially right in #21. If MLB is forced to loan McCourt the money he needs but without any significant strings attached, then it seems like McCourt's odds of retaining control of the Dodgers at least slightly increased yesterday, despite the headlines calling him the loser.

The other financing option had terms that would have required a sale of the television rights, so McCourt was probably going to try to force a sale of the television rights. MLB also gains more leverage because now they an act as a major creditor as well as having all the leverage they had as MLB.

If MLB has a goal of forcing out McCourt, having them be the new creditor is a significant victory.

Somebody needs to explain to me what I'm missing, or whether this was just poorly worded.

I get that the Judge can block the loan deal from MLB to the Dodgers. But if MLB doesn't want to loan McCourt the money sans the stings attatched, can the judge actually force them into that agreement? That seems insane. A 3% loan should come with significant strings attatched, why would they want to loan money at that rate otherwise? Especially since without the "strings", it's basically unsecured.

McCourt was going to get a loan on harsh terms. MLB stepped in during bankruptcy to say they'd give a better loan. McCourt just lost a battle to get his own financing, so he has to go to MLB. IANAL, but I don't think MLB would be an unsecured creditor given that they stepped in after bankruptcy proceedings started. Or maybe MLB is willing to lose money to get McCourt out.

I know just enough about bankruptcy to be dangerous, and the same goes for divorce. Never been through either, but been in the front row watching others go through it. However, the audience sometimes has a better perspective than the combatants.

I have to wonder if McCourt has an irrational need to hold onto the team, meaning, does the logical advice of his lawyers and staff being overwhelmed by hos need to keep ownership and control, defeating MLB and his wife.

I have to wonder if McCourt has an irrational need to hold onto the team, meaning, does the logical advice of his lawyers and staff being overwhelmed by hos need to keep ownership and control, defeating MLB and his wife.

Yes, and I have to wonder whether his gamble of entering BK is going to be worth it. In most instances, the court is worried about preserving the estate for creditors and jobs for the employees but nobody really believes the Los Angeles Dodgers are going to just fold up shop.

First, it's not a 3% loan. I don't know where that number came from. The proposed rate is based on LIBOR + points. Which will make it more than 3%.

The court smacked McCourt down for negotiating a personal benefit in the Highbridge loan and refused to apply the business judgment rule which usually allows the debtor to get their own preferred financing. Anyhow, this does not create a loan between MLB and the Dodgers. The Court has just required the two parties to engage in genuine negotiations - which the Dodgers had been refusing to do.

So, the Dodgers gained exactly nothing from this ruling. McCourt was basically reprimanded for not genuinely guarding the interests of the estate (through refusal to negotiate with MLB) and negotiating a personal stake into the Highbridge loan.

According to the details contained in yesterday's ruling (which can be read here) it's LIBOR + 5.5% (The Highbridge loan was LIBOR + 6.0%).

There are some interesting bits contained in the ruling.

Like this:

Mr. McCourt blames the Commissioner for the Debtors' woes while the Commissioner alleges Mr. McCourt's mismanagement and self-dealing are the cause. It appears that their dispute will shortly be before the court. Their acrimonious relationship and Mr. McCourt's belief that the Commissioner is hostile towards him is an unhelpful distraction that obfuscates the uncontroverted testimony from Debtors' representative ... that Baseball is not hostile to the Debtors.

Or this little gem:

It is unclear to the Court how Debtors think they can successfully operate a team within the framework of Baseball if they are unwilling to sit with Baseball to consider and negotiate even more favorable loan terms while under the Court's protection.

As I see it, here's the problem in a nutshell: McCourt can't own and operate the team coming out of bankruptcy unless he negotiates a broadcasting rights deal, AND that deal must include terms which funnel off a substantial portion of the proceeds up front to he and Jamie. This is both a continuation of the long-standing pattern of siphoning off the team's assets/income, and a necessary step to settling the divorce case. But while negotiating the broadcast rights is something the bankruptcy court might well allow (and indeed something MLB would probably be fine with, too), it's the siphoning off part that neither MLB nor the court will abide -- and nothing that happened yesterday changed this fundamental reality. The only deal that can save McCourt is one he can't get, and the only deal he can get is one that ends his ownership of the Dodgers. The sooner he accepts that reality, the better off everyone will be.

To be fair I don't know how it cam about but Frank now personally owes the financing company money since their proposed deal fell through.

The court noted that it was bad form for him create a personal interest in picking the financier for his company. The court doesn't say, and I don't know, how that payment issue came into being but my read is that they probably fronted him some personal cash which would have been tied into the loan but now much be paid back. This may be incorrect but, in any event, by trying to choose this loan package he basically created a conflict of interest between himself and his company.

The only deal that can save McCourt is one he can't get, and the only deal he can get is one that ends his ownership of the Dodgers. The sooner he accepts that reality, the better off everyone will be.

The more he stonewalls the more likely MLB cuts him a deal that is favorable to him. He loses a ton by caving in, he risks nothing by stonewalling, and can gain a ton by doing so.

If all you have is a dollar and you need to feed your family and everything is 10 dollars or more you might as well buy a lottery ticket.

To be fair I don't know how it cam about but Frank now personally owes the financing company money since their proposed deal fell through.

From what I understand, Frank now owes Highbridge 5.25 million since the deal fell through.

Back in June, with the Court's approval, and with certain conditions, Baseball and McCourt agreed to let the Highbridge D.I.P. financing deal go through temporarily, subject to a July 20 ruling by the Court as to whether the financing would become permanent or whether McCourt would have to negotiate with MLB.

I'm assuming that in return for making $60 million available to the Dodgers on a temporary basis through July 20, Highbridge added a clause imposing the $5.25 million if, indeed, the financing deal was not approved by the Court.

McCourt was basically reprimanded for not genuinely guarding the interests of the estate (through refusal to negotiate with MLB) and negotiating a personal stake into the Highbridge loan.

This is what really sucks about bankruptcy law in the US. Management gets to stay in place.

It's my understanding (and I may be wrong) that the English system requires immediate appointment of a receiver upon bankruptcy filing, i.e. management is out and the receiver takes over and manages the estate on behalf of the creditors. Of course equity still gets any leftovers.

That seems to be a far superior system. Equity should have zero say once in bankruptcy.

I know you are propaganda minister, but just in case anyone else doesn't know the facts of the case.

First, he tried to mortgage the next 20 years of Dodger TV revenues to get enough money to pay for his personal divorce after he had already stripped the team of as much cash as possible, and brought it near bankruptcy. The FOX deal was a clear attempt to skirt MLB debt rules.

The MLB not only offered him DIP financing when he entered bankruptcy, but clearly would have provided financial help had he tried to work with them. Instead he openly tried to skirt their rules, publicly scourged them for not allowing his rule breaking to succeed, and lied to or at least mislead the public to try to win from public opinion what he wasn't contractually or legally entitled.

It's my understanding (and I may be wrong) that the English system requires immediate appointment of a receiver upon bankruptcy filing, i.e. management is out and the receiver takes over and manages the estate on behalf of the creditors. Of course equity still gets any leftovers.

Basically, although bankruptcy legally speaking in the UK only refers to individuals. Corporations either go into liquidation (the company is dissolved, and the assets are sold seperately), or more typically administration, which is what McCourt would be facing in the UK. Unsurprisingly, going into administration involves the appointment of an administrator, who takes over control while the company remains in administration. Worth noting, that the UK does not have a DIP concept, so the company/administrator doesn't have access to that line of financing.

Also, football teams have from time to time entered into administration. The league usually imposes an automatic fine and points deduction (often leading to relegation) to any team that does so.

#48 The penalty is moderately new. And in response to complaints from other teams that there was an advantage to going into administration. Basically the logic was that a team in adminstration didn't need to worry about triggering performance bonuses and the like.